PIERRE, S.D. (KELO) — State Farm can’t recover $5,000 from motorist LeRoy James Jr. it paid to him for medical expenses, the South Dakota Supreme Court said in a decision released Thursday.
Jones was rear-ended on July 16, 2016, on SD 16 near Rapid City by another driver, Melissa Rivers. State Farm covered James and Rivers.
The insurer immediately paid James for a portion of his medical care. The company then settled his claim against Rivers. State Farm paid James $43,000. He paid a one-third contingency fee to his attorney and sales tax, leaving him a net settlement of $19,927.54.
State Farm then sought reimbursement from James for the $5,000 paid to him for medical expenses. James refused to pay.
The two sides split on whether the language was ambiguous in the State Farm policy contract.
Circuit Judge Robert Mandel found in favor of James. Justice Janine Kern wrote the Supreme Court’s unanimous decision upholding the circuit judge’s decision.
Justice Kern said their dispute focused on the meaning of “recovers or has recovered from another person or organization.”
“From our review, there are two equally reasonable interpretations of the reimbursement provision when viewed objectively in the context of the entire agreement,” Kern wrote. “Based on the uncertainty regarding the term ‘recovery,’ we conclude the text of the reimbursement provision is ambiguous.”
She said a previous South Dakota Supreme Court decision established that ambiguity was “to be construed most strongly against the insurer and in favor of the insured.”
Read the James decision: https://ujs.sd.gov/uploads/sc/opinions/28547ibt4sxc.pdf